Welcome Changes to the

Third Country 

Diplomat Program 

 The Third Country Diplomat (TCD) 

Program was established as a pilot in July 

1996. The concept was simple. Expand 

the commissary’s membership base and, in 

turn, increase sales. At that time, three 

employee associations took advantage of 

the opportunity to open the commissary up 

to accredited third country diplomats. 

Since that time, nearly two 

dozen posts have received 

approval to participate in the 

program. 

If these numbers seem 

small, it is because they are. 

Associations participating in 

the program were required to 

provide a list of diplomatic 

missions considered for 

inclusion. Diplomats whose 

governments did not provide 

excellent reciprocal customs 

and tax treatment to U.S. mission 

personnel serving in their home country 

were either denied access or granted access 

with an additional twenty percent fee on 

commissary purchases. It was anticipated 

that these measures would increase the 

Department of State’s leverage for 

resolving reciprocity issues with errant 

countries. However, some posts felt it was 

easier to opt for non-participation than to 

tell their closest allies that they were 

required to pay an additional fee above 

commissary shelf prices. 

In June, the Department’s Office of 

Foreign Missions reviewed program 

results and determined that denying access 

or imposing the fee failed to serve its 

intended purpose. As such, the 

requirement to report/specify missions 

selected for inclusion has been lifted. 

Essentially this program change allows 

Boards of Directors (with post 

management approval) to 

determine which diplomatic 

missions to include without 

restriction once Department 

approval is granted to participate 

in the program. Boards of 

Directors should determine the 

appropriate fee/deposits to 

charge without regard to 

reciprocity. 

This program change does not 

affect the requirement to 

report/specify international organizations 

for which posts would like to provide 

commissary access. Posts must continue 

to request approval for each individual 

international organization. Employees of 

international organizations under 

consideration must have fully accredited 

diplomatic status by the host country for 

the purpose of duty-free privileges. 

Employees of international organizations 

only holding tourist passports may not be 

“The concept 

was simple. 

Expand the 

commissary’s 

membership 

base and, in 

turn, increase 

sales.” 
included even when granted duty-free 

privileges by the host government. The 

Office of Commissary and Recreation 

Affairs (A/OPR/CR) reviews the list of 

international organizations under 

consideration to ensure the U.S. 

government’s participation in the 

organization. If the international 

organization is not deemed to be a 

recognized international organization, the 

request for inclusion is denied. Additional 

international organizations may be added 

to post’s program at any time upon 

A/OPR/CR approval. 

Employee associations seeking to 

participate in the TCD program may 

request approval via cable. In the request, 

the Principal Officer at post must certify 

that the following criteria have been met: 

 Host government approval has been 

obtained. 

 The employee association is fully 

reimbursing post for logistical support 

(utilities, rent when space is USG 

leased, etc.) as it pertains to the 

commissary if operating on USG 

owned or leased property. These 

provisions must be documented in a 

license agreement and submitted to 

A/OPR/CR for review and approval 

prior to program implementation. 

 Revised bylaws have been drafted to 

include an appropriate membership 

category for TCDs provided 

commissary access. Revised bylaws 

must be submitted to A/OPR/CR for 

review and approval. 

 All foreign missions selected to 

participate have provided the 

association with written documentation 

of the diplomats’ duty-free privileges. 

Program guidelines are contained in State 

114462 (available from our intranet site in 

the collective cable directory). If you have 

questions regarding the TCD program, 

please contact the CR Operations Team. 

 MAKE NOTE... 

During the last half of 2002, a number 

of staffing changes took place in CR. 

Details, details, details... 

 In October, we welcomed our newest 

addition to the CR staff, Cynthia (Cyndi) 

Burleigh is a former Controller of an 

international real estate company. Cyndi 

also brings several years of experience as 

an auditor of not-for-profits and 

municipalities. Cyndi joins the staff as the 

new Accounting Team Leader. She is a 

graduate of Salisbury State University with 

a B.S. in Accounting and earned the 

designation of Certified Public Accountant 

from the State of Maryland. She is a 

native of New York and was married in 

April. 

 In July, we bid farewell to Accountant 

Chuck McShane. During Chuck’s tenure 

he spent a great deal of his time analyzing 

audit reports. He traveled to Tel Aviv and 

New Delhi to assist employee associations 

in those locations. Chuck, his wife and 

their new son are now serving a tour of 

duty at the American Embassy in Dar es 

Salaam, Tanzania. 

 In November, we bid farewell to 

Accountant Francisco Lloret. Francisco 

joined the staff in July 1997 as the 

Accounting Team Leader. He was 

instrumental in developing and facilitating 

financial-related workshops for CR 

training conferences, identifying employee 

association trends, providing assistance to 

our colleagues overseas and developing 

new ways to improve CR services. 

Francisco provided on-site assistance to 

too many employee associations to name. 

He is currently attending Financial 

Management Officer training at the 

National Foreign Affairs Training Center 

and will be serving a tour of duty at the 

American Embassy in Yaounde, 

Cameroon. 
Frequently Asked 

Questions 

Each month, we receive many different 

questions from association managers, post 

management, Boards of Directors and 

sometimes members about employee 

association operations. Not every question 

is as unique as one might think. In fact, 

many of you have the same concerns, 

comments and/or questions. We thought 

we would share some of those with you 

along with our guidance. 

Q: How do we determine an appropriate 

salary for our manager and can CR 

provide pay scales from other employee 

associations? CR does not maintain wage 

data for employee associations. In fact, we 

do not recommend that Boards of Directors 

base salary levels on what other employee 

associations are paying employees in those 

locations. The Board must consider such 

factors as the size of the operation, job 

responsibilities/duties and the number of 

staff supervised. In addition, local factors 

such as economic conditions, labor laws 

and wages for similar jobs will come into 

play. Most importantly, the Board must 

determine what the association can afford 

to pay. 

Q: Is it legal for the association to rent 

videos to our members? Absolutely. 

When purchasing videos from an 

authorized source, the employee 

association may make videotaped movies 

and DVDs available on a rental or 

gratuitous basis for the private home 

viewing of its members. This practice is 

permitted under the “first sale doctrine” 

codified in U.S. copyright laws. While the 

“first sale doctrine” does not permit the 

employee association to conduct public 

performances of copyrighted material, CR 

maintains an umbrella agreement with the 

Motion Picture Licensing Corporation to 

allow for public showings often referred to 

as “movie night”. Full details on the 

umbrella license and the conduct of public 

performances are contained in 00 State 

237217 (available from the CR intranet 

site in the collective cable directory). 

Q: Are we required to withhold/pay taxes 

on the income of employee association 

contractors? Most definitely. Employee 

associations are considered USG 

instrumentalities for Federal tax purposes. 

As such, all U.S. citizens and U.S. resident 

aliens performing work for the association 

are considered employees for Federal tax 

purposes. This is true even when the 

individual works a nominal number of 

hours or an intermittent/seasonal schedule. 

Employee associations, not the individual 

employee, are responsible for collecting, 

matching and reporting all social security 

and Medicare payments. A simplified tax 

program and instructional are available 

from the CR intranet site to assist in 

meeting these requirements. Please visit 

our resource library from the home page. 

Employee associations may also contact 

the CR Operations Team directly for 

assistance. 

Have you checked off that 

final year 2002 reporting 

requirement? You know, the 

assessment payment. Each 

year, employee associations are required to 

submit an assessment payment based on 

the gross revenue of the previous calendar 

year. Assessment notifications were 

provided to employee associations via 

cable in September. Payments were due 

November 1. Some payments remain 

outstanding. If you have not received a 

confirmation from us acknowledging 

receipt of your payment, please contact the 

CR Accounting Team for assistance. 

 FAQs 
Retirement Planning 

Options for 

Employee 

Associations 

In order to attract and retain the best 

staff, employers must generally offer 

competitive compensation packages. A 

retirement plan provides employees an 

attractive means of saving for retirement. 

Many associations do not offer retirement 

planning options to employees often due to 

the misconception that such plans come 

with high costs and heavy administrative 

demands. However, there are simple 

retirement plans that may be feasible for 

employee associations. These include a 

Simplified Employee Pension (SEP IRA), 

Simple IRA or Profit Sharing Plan for 

those subject to U.S. taxes. 

The SEP IRA is very popular in the 

small business community. A major draw 

is that employer contributions are flexible 

from year to year. The contribution is not 

taxable to the participants until withdrawn. 

The self-directed SEP IRA offers 

employees the ability to choose 

investments that meet their specific 

retirement needs. 

A Simple IRA is designed for 

organizations with 100 or fewer employees 

and is a salary deferral plan structured to 

eliminate many of the complex 

administrative requirements often 

associated with traditional 401(k) plans. 

The Simple plan allows for employee 

contributions of the employee’s annual 

earned income. For the required employer 

contribution, the association can either 

match 3% of the employees’ contribution 

or pay a flat 2%. The employer and 

employee can share the burden of funding 

the plan and investment earnings 

accumulate tax-deferred until distributed to 

the employee. 

 A Profit Sharing Plan allows for 

unrestricted tax-deductible contributions of 

up to 25% of the employee’s salary. The 

employer makes all contributions and the 

percentage contributed can vary from year 

to year. With this plan, the employer 

retains the flexibility of excluding parttime staff while participating employees 

enjoy an employer-funded benefit plan that 

offers the possibility to accumulate more 

assets on a tax-deferred basis than through 

a traditional individual retirement account 

(IRA). 

 These are a few of the options for 

employee associations seeking to provide 

an employer-sponsored retirement plan. In 

reviewing each plan, you will note the 

mention of tax deferral options. However, 

retirement plans need not be limited to 

U.S. citizen employees. Employee 

associations may consider retirement 

planning options for local nationals and 

third country nationals as well. Be certain 

to check local labor laws in this regard. 

An association-sponsored retirement plan 

can make a difference in your employees’ 

standard of living. The above plans are 

complex and it is recommend that the 

Board of Directors discuss these and other 

options with a qualified advisor. You may 

contact Stephen Thompson by phone at 

1-202-778-1970 or email at 

SHThompson@LMUS.LeggMason.com. 

Stephen is a retired Foreign Service 

Officer and a Financial Advisor for Legg 

Mason Wood Walker, Inc., a diversified 

securities brokerage and financial 

services firm. 

Look for the next issue of 

The CRonicle to be 

published in February 

2003. See you next year!